4
Accepted
The Treasury has improved long-term liability disclosures, but further work is needed to clearly convey...
Recommendation
The Treasury has improved long-term liability disclosures, but further work is needed to clearly convey their insights and relevance to readers. The WGA includes several large and complex liabilities, which the Committee has previously noted are difficult for readers to understand and whose values change significantly due to changes in the discount rate. The three largest liabilities include: • Nuclear Decommissioning provision: Decreased by £19.1 billion from £126.0 billion in 2022–23 to £106.9 billion in 2023–24. • Clinical Negligence provision: As of 31 March 2024, the Department of Health and Social Care (DHSC) reported clinical negligence provisions totalling £58.2 billion, a decrease from £69.3 billion at 31 March 2023. • Pension liabilities: net pension liabilities have decreased from £2,639.1 billion in 2021–22 to £1,311.9 billion at 31 March 2024. Discount rates are used to calculate the present value of future cash flows, reflecting how much a future obligation is worth today, and are closely linked to interest rates, gilt yields, and inflation. Under International Financial Reporting Standards (IFRS), HM Treasury correctly applies a real discount rate (adjusted for inflation) to value long-term obligations. However, the Committee has previously urged HM Treasury to present both discounted and undiscounted values for all major liabilities to improve transparency and accessibility for readers. We strongly believe these 5 figures should be comparable year-on-year so that it is possible to see what action is being taken by the Government to reduce these liabilities. In 2023–24 HMT produced discounted and undiscounted values for the nuclear decommissioning provision balance only. There is therefore no reason why they should not produce it for all other long-term liabilities. recommendation a. In addition to the discounted values required under IFRS, Treasury should disclose undiscounted values for: i) Nuclear Decommissioning provision, ii) Clinical Negligence
Government Response Summary
The Treasury will expand the section on undiscounted liabilities in the 2024-25 WGA by presenting provisions on a fully undiscounted basis, and will also provide an alternative presentation using a flat 2% discount rate applied on a net-of-CPI basis to illustrate the impact of discounting.
Government Response
Accepted
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. decommissioning through the Nuclear Decommissioning Authority (NDA). The recent spending review settlement provided £13.9 billion of capital investment for the NDA to deliver on its priorities, hazard and risk reduction across the estate, consolidate waste at regional stores, and dispose of nuclear materials through the Plutonium Immobilisation and Geological Disposal Facility programmes. The liability is a single point estimate within a broad range of outcomes built on a series of assumptions, due to inherent uncertainty over the next century. The government actively challenges and monitors NDA’s plans and progress through robust governance, with spend subject to value for money assessments. NHS Resolution (NHSR) continues its work to manage clinical negligence and other claims against the NHS in England. NHSR is committed to helping the NHS learn from claims. It is working directly with providers of healthcare services, alongside other national and local bodies working on patient safety, to share learning and best practice across the NHS to drive safety improvement. In addition, DHSC and NHSE continue to prioritise patient safety and learning across the NHS so that harmful patient events are significantly reduced. This includes ongoing work to progress key measures under the NHS Patient Safety Strategy, which sets out how the NHS would improve patient safety continuously. The coalition government introduced new public service schemes from 2014 to 2015. The main changes were to increase the scheme normal retirement ages to the state pension age (except for the police, firefighters, and the armed forces who have a normal retirement age of 60), increase member contributions, and move from a final salary to a career average design. Separately, the indexation of public service pensions was changed from RPI to CPI. The government also maintains the Cost Control Mechanism, which provides for automatic adjustments to scheme design if certain costs move outside of a set corridor. The government’s preferred measure of the cost of the schemes remains the OBR’s long-term projection of spending on pension benefits as a share of GDP, rather than the figure of accrued liabilities, including due to the difficulties in interpreting the liability figure previously noted by the PAC.
Source
Committee
Public Accounts Committee
Report
69th Report - Whole of Government Accounts 2023-24
04 Mar 2026
HC 1243
Addressee Bodies
HM Treasury
Timeline
Recommendation age
0.4 yrs
Report published
04 Mar 2026